Guv agrees to pay losing bidders

The last batch of bills signed by Gov. Neil Abercrombie included one of the hold-your-nose gems of this year’s Legislature — HB 985, which allows the state to reimburse some losing bidders on public works projects for the cost of preparing their bids.

The measure, which Abercrombie approved without comment, allows the state to spread around more money without evidence of public good to contractors who also happen to be generous campaign contributors to legislators and the governor.

The reimbursements would apply to design-build contracts on projects worth $1 million or more, with the top three pre-qualified bidders eligible for repayment on the cost of preparing conceptual design drawings.

Sponsors said such welfare for losing contractors would encourage more small local companies to submit bids, but none of the House and Senate committees that approved the bill offered evidence that other jurisdictions have successfully used such methods to either increase the quality of competition or reduce contract costs.

Paying losing bidders is virtually unheard of in the private sector; reputable contractors view bid preparation as a cost of doing business and have it down to a science.

Testimony in support of the bill came mostly from architects, engineers and other consultants known to make political donations that obviously pay off nicely for them.

The measure was opposed by the City and County of Honolulu, which said, “Codifying a rigid process that destroys flexibility would be costly and disadvantageous.”

HB 985 received unanimous final passage in the House and drew “no” votes in the Senate only from Sens. Clayton Hee, Donna Mercado Kim, Sam Slom and Malama Solomon.

5 Comments on “Guv agrees to pay losing bidders”

I was speechless for 5 minutes! How can the State, which supposedly has no money, spend on something so unnecessarily? It just boggles the mind. This is politics at its worst. No wait…if Social Security and Medicare get cut, that would be worse. I wonder what it’s like to live in, say….Canada?

Bunch of idiots! Again the tax payers finance the $$$ to contributors of our legislators and elected officials. Where else but Hawaii under the table shenanigans are now dealt with in the open. Way to go guys, get all your self indulged perks while you can. Kudos to those who voted against and kiawe thorns to those who introduced or voted for HB 985! WE WON’T FORGET COME ELECTION TIME!

In a true bid competition,as distinct from a Request for Proposal, the deciding criteria for award is generally either the highest revenue offer or the lowest cost offer. Yes, there may be other supporting criteria involved but the bid – by definition – is a financial contest. Typically, pure bids require relatively little in terms of expensive support materials beyond qualifications, personnel, experience, legal forms and basic work plan. So why reimburse bidders? It doesn’t match practice.

In an RFP process there is often a great deal of support material required and these proposals can be very expensive. But at the end of the day it is the proposing company that decides how much to spend. Some like to spend huge sums in the belief,partially true, that sheer volume and size of the proposals provide cover to the selection committees and thus improve the chances of a win. One common solution is for the RFP to specify the scope of the proposal. Ultimately, the trick is to decipher between companies who are masters of proposals and those who are masters of doing the actual work.

At the end of the day, compensating losing “bidders” is the business equivalent of today’s playgrounds where no child ever loses at a game. They are all winners. Trying is the main thing,not accomplishing.